Here we have primarily two upstream firms (Coke and Pepsi) and two or more downsteam firms, Coke's bottlers and Pepsi's bottlers. Now the upstream firms have (simply) two options, to vertically integrate (buy their bottlers) or to not vertically integrate. Each has an incentive to vertically integrate and by doing so, will make lower profits than by not vertically integrating. It is a great example of the Prisoner's Dilemma.